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Pakistan Money Market Review

Updated on Apr 07, 2001

The interbank market maintained the soft stance as witnessed from the previous weeks. Rates already under pressure also fell further and remained at 1.50% and 2.00% throughout the week. FIB maturity of Rs. 4.55 billion was another reason for the slide in short term levels. The trading week was reduced to 4 days due to the holidays on Wednesday and Thursday on account of 9th and 10th of Muharram, respectively. The T-Bill auction settlement and maturity did cause an outflow of approximately Rs. 15.70 billion but market players continued to express their bearish outlook as witnessed by trades in the one and two week tenors at 4.50% and 7.00% respectively. However towards the end of trading hours on Friday, rates shot up with overnight activity as high as 12.50%. The market remained well in double digits on Saturday with rates shooting up to 12.90% towards close and banks having to resort to the repo discount window for respite with discounting in excess of Rs. 2.50 billion.

The ease of short term levels caused the term levels to come under pressure as well, as seen from the one month trades as low as 9.25%. Moderate amounts are dealt with trades mostly being conducted on Monday while trades in forward from the auction settlement day were reported to have traded at 9.75%. With reports of lenders having placed funds for three month tenor as low as 10.50% and the three and six month 22nd March T-bills trading at rates of 10.80% and 11.25% as well in the secondary market did reflect the sentiment of banks taking part in the coming auction. As forecasted in our last weekly, bidding for the three month paper in the auction was witnessed aggressively with bids as low as 10.95% (*the previous three month cut-off yield being 11.27%) while participation for the six and twelve month papers was witnessed around previous levels. SBP accepted a total amount of Rs. 19.45 billion with the three and six month cut-off being brought down to 11.18%, 11.58% and the twelve month being raised and brought up to 12.00%.

A "tight monitory policy" is what the authorities have committed to the IMF and accepting an amount of Rs. 19.45 billion against the pre-auction target of Rs. 3.50 billion does seem to be a step in the direction. SBP has also announced a PIB auction scheduled for the 17th of April with the target amount of Rs. 12 billion. Interest has been cropping up for new PIBs since the Valentines issue i.e. the 14/02/01 PIB. Inflows on account of maturities of bonds issued to public sector enterprises in 1996 have been witnessed in the month of March and more are expected as well. We feel that participation of around Rs 12 billion at nominal premiums is not a distant possibility, specially afar the T-Bill auction result has ruled out any imminent hike in interest rates.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.25

11.90

08.00%

2 Year

12.65

12.40

08.75%

3 Year

12.85

12.75

09.50%

4 Year

13.00

13.00

09.75%

5 Year

13.25

13.25

10.25%

10 Year

13.50

13.50

11.00%

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AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Apr 03  T-BILL Apr 03 Apr 06
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.3,500 Mln 

Rs.29,300 Mln.

Rs.16,450 Mln



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

06 Apr

3,710 Mln

T-Bill

13 Apr

500 Mln

T-Bill

19 Apr

5,200 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

12.90

10.00

08.00

1 Week

10.75

09.00

04.50

1 Month

10.50

09.50

06.25

3 Month

10.90

10.65

06.70

6 Month

11.40

11.20

07.00

1 Year

11.75

11.60

N. A.




TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO

1 Month

11.50

10.50

06.75

2 Month

10.75

10.25

06.80

3 Month

10.90

10.85

06.90

4 Month

11.10

11.00

06.95

5 Month

11.30

11.20

07.00